Correlation Between NYSE Composite and YY
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and YY at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NYSE Composite and YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and YY Inc Class, you can compare the effects of market volatilities on NYSE Composite and YY and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NYSE Composite with a short position of YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and YY.
Diversification Opportunities for NYSE Composite and YY
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and YY is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and NYSE Composite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NYSE Composite are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of NYSE Composite i.e., NYSE Composite and YY go up and down completely randomly.
Pair Corralation between NYSE Composite and YY
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the YY. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 2.97 times less risky than YY. The index trades about -0.22 of its potential returns per unit of risk. The YY Inc Class is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,075 in YY Inc Class on January 28, 2024 and sell it today you would earn a total of 263.00 from holding YY Inc Class or generate 8.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. YY Inc Class
Performance |
Timeline |
NYSE Composite and YY Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
YY Inc Class
Pair trading matchups for YY
Pair Trading with NYSE Composite and YY
The main advantage of trading using opposite NYSE Composite and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, YY can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in YY will offset losses from the drop in YY's long position.NYSE Composite vs. Alto Ingredients | NYSE Composite vs. Ryanair Holdings PLC | NYSE Composite vs. Yips Chemical Holdings | NYSE Composite vs. Mesa Air Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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